I came across a contract recently that said, “earnest money deposit to be turned over to the seller immediately and on top of price.”  I had never seen this before, but it seemed plain as day what it meant.  It meant the earnest money was not to be escrowed.  It was to be delivered directly to the seller, put in the seller’s bank account for their own use, and was an additional fee on top of the price.

In a discussion with other agents, many agents said things like, “The earnest money is required to be put in an escrow account.”

Or, “The earnest money deposit is required to count toward the purchase price.”

Or, “The seller can’t do that.  It’s illegal.  The earnest money deposit must ALWAYS go immediately to the title company.”

There are certain things that are law and cannot be negotiated.  For example, there are certain disclosures that are required to be delivered to the buyer.  The buyer cannot waive their right to see those.  The buyer doesn’t have to read them.  He can throw them in the trash as soon as the seller hands them over, but the seller has to give the disclosures.

But that vast majority of the contract is 100% negotiable.  One of those negotiable items is the amount of earnest money deposit, and whether it is placed in escrow.  In Florida, if a broker accepts the deposit, they have to put it in escrow, either in their own escrow account, an attorney’s escrow account, or a title company’s escrow account.  But if it is given directly to the seller, he can do whatever he wants to with it.  For example, when I bought my house, I didn’t pay any escrow.  I showed up with all the money at closing.  I was OK with that.  The seller was OK with that.  It all worked out.  If I hadn’t shown up at closing, the seller wouldn’t have as much recourse.  But in this case, he wasn’t worried about that.  I have heard of others doing this occasionally as well.  It’s a little unconventional, and not something I would recommend in most cases.  But in some cases, it’s perfect.

Too often, agents think that the standard preprinted contract is the contract, and it cannot be changed.  If someone wanted to put a condition in the contract that all parties have to show up to closing wearing pink shirts or the contract is terminated, they could.  Is that stupid?  Yes.  Is it legal and enforceable?  Also, yes.

The point is there are few things in real estate that are non-negotiable.  People add or delete things from contracts that sometimes only make sense to them.  The Realtor who succeeds is the Realtor who can be flexible, even when someone wants to change the preprinted contract.

If you want to learn more about contract and everything else you need to know to get your Florida real estate license, check out Demetree School of Real Estate.

Please note that Karen Climer has no affiliation with Climer School of Real Estate.  Her father, Ron Climer, sold Climer School of Real Estate in 2014.  It has since been involved in several mergers and acquisitions and is owned by a large investment company.  Karen owns Demetree School of Real Estate in Orlando, Florida.